“Bermuda should take heed of what is happening in Cayman Islands, where its Government is being compelled by the UK to raise taxes because of excessive debt,” Shadow Finance Minister Bob Richards said.
Earlier this month their local media reported that the Cayman Islands will be introducing a 10% tax for foreign workers earning over $20,000 per year. Cayman Premier McKeeva Bush said he did not want to impose the tax, but he had no choice because the United Kingdom was demanding a sustainable budget.
Premier Paula Cox responded saying: “While Cayman has been forced to consolidate their finances, Bermuda has already taken plans to stabilise our fiscal position over the medium term.”
Mr Richards said: “Bermuda should take heed of what is happening in Cayman Islands, where its Government is being compelled by the UK to raise taxes because of excessive debt.
“This extraordinary situation is driven by the fact that the United Kingdom has “contingent liability” for the debt of its Overseas Territories, meaning that creditors can turn to it in the event a Territory defaults or goes bankrupt.
“Bermuda is, of course, a UK Overseas Territory. We’re not sure if the UK Government is concerned about Bermuda’s debt situation, but the fact that Finance Minister Paula Cox has presided over an 800% increase in Government debt since 2004/05 must concern every Bermudian.
“If the Government’s appetite for more debt continues at its record-setting pace – just in the last month we’ve taken on $180 million more debt – then the risk of external intervention in our financial affairs can only grow.
“It is interesting to note that the UK is requiring Cayman to get onto a financial footing that is sustainable, meaning it must bring its revenue and spending situation into better balance. According to 2011/12 figures reported in The Bermuda Sun today, nearly one quarter of every dollar the Government spends is borrowed.
“In 2004/05, when the current Finance Minister was appointed, just 3 cents of every dollar Government spent was borrowed. Clearly, by these measures, Bermuda is not moving in the right direction,” continued Mr Richards.
“With the exception of the last six to seven years, Bermuda has always demonstrated a strong degree of responsibility in the management of its public finances. It is long past time we got back to a more responsible and sustainable path.
“The One Bermuda Alliance has an economic recovery plan that combines pro-growth policies to increase the Island’s revenues and a commitment to cut wasteful spending. Putting Bermuda on a stronger financial footing will create more opportunity for Bermudians and provide us with the resources to meet the Island’s social challenges,” concluded Mr Richards.